Letter to BS: Govt's move to reduce fuel prices may hit oil companies

It was shocking to see the oil companies being asked by the government to bear a cost of Rs 1 per litre on petroleum products. By doing so, these companies will lose billions in market capitalisation and the shares may also fall by 35-55 per cent. Why did it happen? The government’s move is being seen by the market as walking away from the deregulated oil price regime. As a result, the companies will lose margins. The same objective would have been achieved if the Rs 2.5 reduction was by the Central government and its loss was compensated by high